Author: Trichordist

Spotify Makes Kate Nash’s Argument With the Usual Blame Game

Daniel Ek is indifferent to whether the economics of streaming causes artists to give up or actually starve to actual death. He’s already got the tracks and he’ll keep selling them forever like an evil self-licking ice cream cone.

Kate Nash is the latest artist to slam Spotify’s pathetic royalty payments even after the payola and the streaming manipulation with the Orwellian “Discovery Mode” as discovered by Liz Pelly. According to Digital Music News, Kate Nash says: 

“‘Foundations’ has over 100 million plays on Spotify — and I’m shocked I’m not a millionaire when I hear that! I’m shocked at the state of the music industry and how the industry has allowed this to happen,” said Nash. “We’re paid very, very, very poorly and unethically for our recorded music: it’s like 0.003 of a penny per stream. I think we should not only be paid fairly, but we should be paid very well. People love music and it’s a growing economy and there are plenty of millionaires in the industry because of that, and our music.”

But then she said the quiet part out loud that will get them right in their Portlandia hearts:

She added: “And what they’re saying to artists from non-rich privileged backgrounds, which is you’re not welcome here, you can’t do this, we don’t want to hear from you. Because it’s not possible to even imagine having a career if you don’t have a privileged background or a privileged situation right now.”

This, of course, comes the same time that Spotify board members have cashed out over $1 billion in stock including hundreds of millions to Daniel Ek personally, speaking of privilege.

Using forks and knives to eat their bacon

Spotify responds with the same old whine that starts with the usual condescending drivel, deflection and distraction:

“We’re huge fans of Kate Nash. For streams of her track ‘Foundations’ alone — which was released before Spotify existed — Spotify has paid out around half a million pounds in revenue to Kate Nash’s rights holders,” reads Spotify’s statement.

“Her most streamed songs were released via Universal Music Group. Spotify has no visibility over the deals that Kate signed with her rights holders. Therefore, we have no knowledge of the payment terms that were agreed upon between her and her partners.”

This is a very carefully worded statement–notice that they switch from the specific to the general and start talking about “her rights holders”. That means no doubt that they are including the songwriters and publishers of the compositions, so that’s bullshit for starters. But notice how they are making Kate’s own argument here by trying to get you to focus on the “big check” that they wrote to Universal.

Well, last time I checked in the world of arithmetic, “around half a million pounds” (which means less than, but OK) divided by 100,000,000 streams is…wait for it…shite. £0.005 per stream–at the Universal level but all-in by the sound of it, i.e., artist share, label share, songwriters and publishers. This is why Spotify is making Kate’s argument at the same time they are trying to deflect attention onto Universal.

Then–always with an eye on the DCMS authorities in the UK and the UK Parliament, Spotify says:

“We do know that British artists generated revenues of over £750 million on Spotify alone in 2023 — a number that is on the rise year on year — so it’s disappointing to hear that Spotify’s payments are not making it through to Kate herself,” the company concluded.

Oh, so “disappointed.” Please spare us. What’s disappointing is that the streaming services participate in this charade where their executives make more in one day of stock trading than the company’s entire payments to UK artists and songwriters.

This race to the bottom is not lost on artists.  Al Yankovic, a card-carrying member of the pantheon of music parodists from Tom Leher to Spinal Tap to The Rutles, released a hysterical video about his “Spotify Wrapped” account.  

Al said he’d had 80 million streams and received enough cash from Spotify to buy a $12 sandwich.  This was from an artist who made a decades-long career from—parody.  Remember that–parody.

Do you think he really meant he actually got $12 for 80 million streams?  Or could that have been part of the gallows humor of calling out Spotify Wrapped as a propaganda tool for…Spotify?  Poking fun at the massive camouflage around the Malthusian algebra of streaming royalties gradually choking the life out of artists and songwriters? Gallows humor, indeed, because a lot of artists and especially songwriters are gradually collapsing as the algebra predicted.

The services took the bait Al dangled, and they seized upon Al’s video poking fun at how ridiculously low Spotify payments are to make a point about how Al’s sandwich price couldn’t possibly be 80 million streams and if it were, it’s his label’s fault.  Just like Spotify is blaming Universal rather than take responsibility for once in their lives. 

Nothing if not on message, right? As Daniel Ek told MusicAlly, “There is a narrative fallacy here, combined with the fact that, obviously, some artists that used to do well in the past may not do well in this future landscape, where you can’t record music once every three to four years and think that’s going to be enough.” This is kind of like TikTok bragging about how few children hung themselves in the latest black out challenge compared to the number of all children using the platform. Pretty Malthusian. It’s not a fallacy; it’s all too true.

I’d suggest that Al and Kate Nash were each making the point–if you think of everyday goods, like bacon for example, in terms of how many streams you would have to sell in order to buy a pound of bacon, a dozen eggs, a gallon of gasoline, Internet access, or a sandwich in a nice restaurant, you start to understand that the joke really is on us. The best way to make a small fortune in the streaming business is to start with a large one. Unless you’re a Spotify executive, of course.

by Trichordist

New Songwriter Union Survey and @ArtistRights Institute Newsletter 3/10/25

The Artist Rights Institute’s news digest Newsletter

New Survey for Songwriters: We are surveying songwriters about whether they want to form a certified union. Please fill out our short Survey Monkey confidential survey here! Thanks!

Big Tech’s “Text and Data Mining” Lobbying Head Fake

George York of Digital Creators Coalition and RIAA gives an excellent overview of international AI Text and Data Mining (TDM) loopholes and how to plug them. Nov. 20, 2024 Artist Rights Symposium, Washington, DC. Watch the Symposium playlist here.

Music

“I felt like a puppet”: the Motown hit Marvin Gaye felt like he didn’t deserve (Ben Forrest/Far Out) (h/t @ElizaNealsRocks

TikTok

Negotiations over a TikTok US deal have reportedly yet to begin (Stuart Dredge/Music Ally)

Artificial Intelligence: Text and Data Mining Exceptions

Digital Creators Coalition Letter to USTR on US Trade Policy for Threats from Text and Data Mining Exceptions Misapplied in AI Training (Chris Castle/Artist Rights Watch)

Sony slams ‘unworkable’ AI plans as music theft (William Turvill/The Sunday Times)

AI copyright shake-up could breach international law (Mark Sellman/The Times). (Tracks comments on Berne et al made by Digital Creators Coalition to USTR)

REPORT ON PIRATED CONTENT USED IN THE TRAINING OF GENERATIVE AI (Rights Alliance for Creative Industry on the Internet)

Ticketing

TWO PEOPLE ARRESTED ON CYBERCRIME CHARGES AFTER STEALING STUBHUB TICKETS TO ERAS TOUR(Daniel Kreps/Rolling Stone)

by Trichordist

Has the MLC Become a $1.2 billion Hedge Fund?

It’s becoming increasingly clear that the MLC has little to no oversight. The Copyright Office is tasked by Congress with oversight authority over this quasi-governmental organization under the Music Modernization Act. Yet there is nothing happening in the way of guardrails. The Copyright Office haven’t even concluded their mandated five-year review of the MLC that started a year ago. Not only has no one responded to Congressman Fitzgerald’s inquiries about the MLC’s oddball finances, the Copyright Office hasn’t responded to the many public comments demanding answers on the MLC’s sketchy finances as demonstrated on their tax returns.

The MLC’s 2023 tax return shows the quango is holding $1,212,282,220 invested in publicly traded securities–that’s $1.2 BILLION. That’s a fortune for an organization that makes no money–because as we were told ad nauseum the services pay it’s operating costs and bloated salaries-and has no profits because it is not an operating company. But it does hold several fortunes in unmatched royalties it does not seem to be in a hurry to match and pay out to songwriters.

The Supplement to the MLC’s 2023 tax return includes this language:

In our Form 990 for 2023, we provided information regarding funds we were holding in banks and investments as of the beginning of 2023 and the end of 2023. These included assessment funds that we subsequently use to fund our operations; royalty funds we were not yet able to distribute and on which we are required to earn interest in accordance with the Music Modernization Act (MMA) of 2018; and royalty funds we were holding pending distribution.

What the MMA actually says in the black box penalty language of 17 USC §115 (d)(3)(H)(ii) is:

Interest-bearing account.—Accrued royalties for unmatched works (and shares thereof) shall be maintained by the mechanical licensing collective in an interest-bearing account that earns monthly interest—

(I) at the Federal, short-term rate; and

(II) that accrues for the benefit of copyright owners entitled to payment of such accrued royalties.

The black box penalty in 17 USC §115 (d)(3)(H)(ii) is similar to the late fee charged to licensees. The code creates an incentive for the MLC to pay out unmatched funds quickly to avoid the market share distribution of black box which could happen any minute now (particularly since the Copyright Office hasn’t completed the five-year review it started over a year ago).

This language of 17 USC §115 (d)(3)(H)(ii) does not “require” the MLC to “earn interest”, it requires them to PAY interest. Because it is inextricably tied to job performance, it would not be a payment borne by the licensees as part of the administrative assessment as part of the “collective total costs.”

That’s why it’s a penalty. It is, in my view, absolutely false and misleading to state in a matter under the jurisdiction of the federal government that the MLC is in compliance with a code section that does not say what they say it says. And it’s not just this one time, the CEO has said almost these exact words in testimony to the House IP Subcommittee and in supplemental written testimony to answer questions for the record from the Subcommittee.

Even if you want to be generous and accept the MLC’s argument–and it’s just an argument–that the MMA “requires” the MLC to “earn” interest, an “interest bearing account” simply does not contemplate “investing” other people’s money–your money–in publicly traded securities by a stock broker. When asked direct questions about who bears the downside and who gets the ups on their stock trading, the MLC has never answered the question. 

The closest to an answer we get from the plain statutory language is that the MLC is required to pay interest on unmatched funds at the “federal short term rate” which is approximately 4.23%. Does that mean that if the MLC makes more than a 4.23% return they keep the upside? Or if the stock brokers don’t achieve that return, does that mean the licensees cough up the difference in additional administrative assessment contributions? Unlikely, so would the MLC’s board members pass the hat? I’ll believe that when I see it.

While the MLC refuses to answer who participates in the benefits or downside of the investment policy, the amount invested in publicly traded securities over 12 months has radically increased from $804,555,579 at the beginning of 2023. As of the end of 2023, the MLC’s holdings in publicly traded securities alone increased to $1,212,282,220, approximately a 50% gain over 12 months. What we don’t know is if that gain is due to slick stock trading, monkey with a dartboard or the addition of new money, Madoff-style. (And of course if they do manage to “blow up the compulsory” which is the latest from the smart people, who knows who gets to keep the black box?)

The MLC offers this explanation:

At the beginning of 2023, we were holding $138.8 million in “Savings and temporary cash investments.” By the end of 2023, we had moved $131.1 million of these funds to “Investments – publicly traded securities,” leaving the remaining $7.7 million in “Savings and temporary cash investments.” At the beginning of 2023, we were holding $804.6 million in “Investments – publicly traded securities.” By the end of 2023, the amount of funds we were holding in this category increased to $1.2 billion. This year-end amount included the $131.1 million we had moved from “Savings and temporary cash investments”
into this category during the year.

Realize that this language explains nothing. Not only do they round down by $12,282,220, they simply describe movements of cash without explaining why it happened.

So once again, we are presented with a document that avoids the key issue at best and is misleading at worst. But what is clear is that the MLC has more in holdings that approximately 130 regional banks that have substantial disclosure obligations. It’s looking more and more like a hedge fund.

TheMLCsForm990-2023Download
by Trichordist

The Madness of Amazon’s Song Royalty Refund Demand

You can check out any time you like, but you can never leave.
Hotel California, written by Don Felder, Glenn Frey and Don Henley

There’s no opt-out in either the Hotel California or the compulsory song license. And Amazon’s demand for a royalty refund from songwriters demonstrates once again the madness of the Copyright Royalty Board rate-setting procedures. Whether it creates enough ripples in the booming business around buying out songwriter royalties remains to be seen.

How did we get to this point in the circus act? You may have noticed that sliced bread is in close competition with fire and the wheel for second place behind Greatest Human Accomplishments. Both fire and the wheel are yielding to streaming mechanical royalty rates in the Phonorecords III remand negotiations.  Yes, the so-called “headline rates” in Phonorecords III (or “PR III”) are a Nobel-worthy accomplishment.  At least according to the press agents.

And yet something curious has happened.  I’m told that Amazon, through its agent Music Reports (MRI), has posted what is essentially a demand letter in the MRI user portal.  This demand letter instructs publishers who have directly licensed songs to Amazon to pay up because of an overpayment of streaming mechanicals due to the adjustment required by the new-ish Phonorecords III remand rates that finally set the streaming mechanical rates for the industry.  Something similar may be happening at the MLC; we’ll come to that below in just a bit.

In a testament to just how whack the Copyright Royalty Board system actually is, the PR III remand concerns royalties paid from 2018 through 2022.  That’s right—starting six years ago.  This is largely due to the failure of the publishers to obtain a waiver of the PR III decision as a negotiating chip when they gave away the rest of the farm in Title I of the Music Modernization Act (also hailed as a great gift to songwriters). But I’d say it is primarily due to the desire of digital music services like Amazon—including the largest corporations in commercial history—to crush the kitchen tables of songwriters.  Because judging by the massive overlawyering in the Copyright Royalty Board, that sure looks like the motive.

And when it comes to the services crushing the little people, money is no object, even if they spend more on litigation than the royalty increase cost them.  Evidently the sadistic psychic benefit greatly exceeds the cost.

But Amazon evidently has discovered that even after all the shenanigans with PR III, it appears that they paid too much and now they want it back.  That’s right—Amazon shamelessly wants you to cut them a check.  Because a market value over $2,000,000,000,000 is just not enough. I wonder which buffoon advised Mr. Bezos that was a good idea.

Here’s what it looks like on MRI:

A few questions come to mind.  First, realize what Amazon is saying.  They were evidently accounting to publishers at the rates for Phonorecords II during the several years that the PR III rates were on appeal and then re-litigated before the Copyright Royalty Board.  The final PR III rates (sometimes called “remand rates”) issued in August of last year (2023) were supposed to be an improvement over the PR II rates don’t you know.  At least according to the braying that accompanied the announcement.  In fact, the PR III remand rates where it all ended up were themselves supposed to be an improvement, meaning that publishers were to be paid more under PR III than under PR II. Maybe that’s the difference between an increase in the payable rates compared to an increase in the payable royalties.

So if that’s true, and if Amazon paid PR II rates during the lengthy PR III appeal, why is there now an overpayment by Amazon?  An overpayment that they now want you to pay back? Wouldn’t you expect to see the true-up on new rates result in publishers receiving a credit for increased rates?  Especially if the stream counts and subscriber totals stayed the same on these previously-issued accounting statements? (Not to mention this may be happening at other services, too.)

Some of these PR III statements pre-date and overlap with the MLC’s creation and the “license availability date” for the 2021 blanket license established under Title I of the MMA.  That means that if you or your publisher had a direct deal with Amazon during the PR III rate period, there may be overlapping periods when the MLC took over Amazon’s accountings.

It has long been the standard industry practice that overpayments are just debited to your royalty account.  Nobody asks you to cut a check. Debiting your account is not much better–you still have to pay them back, and the so-called “overpayment” will still potentially zero out your MLC accounts, too. If you did a royalty buyout that included an assumption that these royalties would be paid, your financier may come up short under either direct license or MLC.

This is particularly true for publishing administrators.  If a service were to debit an administrator’s account, that might result in the administrator having to go out of pocket in order to pay some of their publishers for the amount of the demand. If that overpayment is large enough, that administrator may owe royalties to publishers that did not have the benefit of the overpayment. This is pretty elementary math, 2 plus 2 being what it is. You don’t even have to carry the 1.

However, great news!  Amazon will give you an interest-free payday loan so you can pay down your new debt over six months. Or before they send it to collection.

Now the MLC—it’s entirely possible that Amazon is pulling the same stunt under the statutory license. However, it appears that MLC is doing what is normally done in these situations and will be debiting and crediting as necessary.  If you’re concerned, it would be worth checking and asking for an explanation from the MLC.

Even so, it does not change anything about why there is an overpayment in the first place.  If there were ever a situation that cried out for an intensive royalty compliance exam, this is it.  It is hard to believe that all this to-ing and fro-ing with your royalty payments across multiple rates in multiple accounting periods hasn’t resulted in mistakes.  No crime, it’s complex.  That’s why we have audits. At a minimum, Amazon needs to provide publishers with a detailed breakdown of how the repayment was determined along with an explanation of where the rates changed that caused the overpayment.

That’s why Amazon and any other similarly situated service should welcome an extensive audit.  In fact, the MLC should just include the true-up (or true-down in Amazon’s case) in their already-noticed audit of Amazon. This episode also raises the question of who else is going to pull the same stunt.

This slice of life demonstrates once again how unworkable the entire Copyright Royalty Board system is for streaming mechanical royalties. The services get to drag out appeals forever, and songwriters pay the consequences. But like the man said, you can never leave. And the Music Modernization Act just got every one locked in even deeper.

[A version of this post first appeared on MusicTechPolicy]

by Trichordist

Stubhub & Co. Launch Stealth state-by-state legislative offensive strategy for Astroturf “Model” State Ticketing Laws

By Chris Castle

Yes, it’s kismet in the legislature–the sketchy ticket resellers are redoubling their efforts to normalize “speculative tickets.” They have found a willing partner in gaslighting with an organization called “ALEC”.

The American Legislative Exchange Council (hence “ALEC“) is a nonprofit organization that brings together private sector representatives and relatively conservative state legislators to draft (and pass) “model legislation” that pushes a particular narrative. (That private sector representation is led by Netchoice, aka, Big Tech.) Unlike other model legislation with a social benefit like say the Uniform Partnership Act, ALEC’s “model legislation” pushes a particular agenda. Examples would be “stand your ground” gun laws, Voter ID laws, and “right to work” laws.

Netchoice Members (Netchoice leads ALEC’s Private Enterprise Advisory Council)

ALEC’s many successfully-passed “model” laws are intended to be passed by state legislatures as-written. Like Al Capone’s green beer, it ain’t meant to be good it’s meant to be drunk. A cynic–not mentioning the names of any particular cynics–might say that the ALEC strategy is an end-run around federal legislation (like the fake library legislation that was shot down in New York). If ALEC can get a critical mass of states to pass one of their “model bills” as-drafted on any particular subject, then the need for federal legislation on that topic may become more muted. In fact, if federal legislation becomes inevitable, the ALEC model bills then provide guidance for federal legislation, or new federal legislation has to draft around the states that adopt the model bill.

So much for Justice Louis Brandeis’ concept of states as laboratories of democracy (New State Ice Co. v. Liebmann, 285 U.S. 262 (1932)), unless that lab belongs to Dr. Frankenstein. ALEC’s mission claims to promote principles of limited government, free markets, and federalism; I will leave you to decide if it’s more about checkbook federalism.

Ticketing Panel, Artist Rights Symposium 11/20/24, Washington DC
L-R: Chris Castle (Artist Rights Institute), Dr. David Lowery (Univ. of Georgia, Terry College of Business), Mala Sharma (Georgia Music Partners), Stephen Parker (National Independent Venue Association), Kevin Erickson (Future of Music Coalition)

Like so many of these bills, ALEC’s Live Event Ticketing Consumer Protection & Reform Act disguises its true objective with a bunch of gaslighting bromides that they evidently believe to be persuasive and then when you’re not looking they slip in the knife. Then when the knife is protruding from your back you discover the true purpose. I think this section of the bill is the true purpose:

This is an odd construct. The model bill starts out by requiring positive behavior of a primary seller (which would be the band on fan club sales or other direct to fan sales). That positive behavior immediately turns to using the ticket purchaser into an enforcer of the values beneficial to the ticket reseller. This is done by forcing a purchaser to be able to resell their ticket without regard to any restrictions placed on reselling by the artist. 

And you know that’s the intention because the section also requires there to be no maximum or minimum price. While the model bill doesn’t require any particular restriction on the platforms, it has enough in it that it can look like a consumer protection bill, but what it is really doing and apparently was designed to accomplish is eliminate an artist’s a ability to set prices.

ALEC is serious about violations of the act, including civil penalties. Their model ticketing legislation can be enforced by both the Federal Trade Commission and state attorneys general. Penalties can include fines of up to $15,000 per day of violation and $1,000 per event ticket advertised or sold. One problem with the model bill is that it appropriates jurisdiction already available to federal agencies like the FTC which is already failing to enforce the existing BOTS Act and other property theft laws.

The main targets seem to be Stubhub’s competitors like “Primary Ticket Merchants,” These are the original sellers of event tickets, such as event organizers or venues. “Secondary Ticket Merchants” may also be prosecuted as well as individuals.

We continue to study the proposed model legislation, but I tend to agree with Stephen Parker (NIVA) and Kevin Erickson (Future of Music) on my Artist Rights Institute panel in DC yesterday. The better model bill may be their bill passed in Maryland, recently signed into law by Maryland governor Wes More.

Key differences between Maryland and the ALEC bill I could spot:

  • Scope of Penalties: The Maryland bill specifies fines for speculative ticket sales, while the ALEC bill includes broader penalties for various violations.
  • Refund Policies: The Maryland bill explicitly requires refunds for counterfeit tickets, canceled events, or mismatched tickets, whereas the ALEC bill focuses more on transparency and restrictive practices.
  • Study on Resale Impact: The Maryland bill includes a provision for studying the impact of resale price caps, which is not present in the ALEC bill.

    It appears that the Live Event Ticketing Consumer Protection & Reform Act will be introduced at the ALEC meeting on December 5, 2024. This is where ALEC members, including state legislators and private sector representatives, will discuss and vote on the model policy. 

    Watch this space.
by Trichordist

NAME, IMAGE AND LIKENESS RIGHTS: New Speaker Update for Nov. 20 @ArtistRights Symposium at @AmericanU @KogodBiz in Washington DC

We are announcing more topics and new speakers for the 4th annual Artist Rights Symposium on November 20, this year hosted in Washington, DC, by American University’s Kogod School of Business at American’s Constitution Hall, 4400 Massachusetts Avenue, NW, Washington, DC 20016.  The symposium is also supported by the Artist Rights Institute and was founded by Dr. David Lowery, Lecturer at the University of Georgia Terry College of Business.

We’re pleased to add an overview of artificial intelligence litigation in the US by Kevin Madigan, Vice President, Legal Policy and Copyright Counsel from the Copyright Alliance and an overview of international artificial intelligence-related legislation by George York, Senior Vice President International Policy from RIAA. We’re also announcing our fourth panel and speaker line up:

NAME, IMAGE AND LIKENESS RIGHTS IN THE AGE OF AI:  Current initiatives to protect creator rights and attribution

Jeffrey Bennett, General Counsel, SAG-AFTRA, Washington, DC
Jen Jacobson, Executive Director, Artist Rights Alliance, Washington DC
Jalyce E. Mangum, Attorney-Advisor, U.S. Copyright Office, Washington DC

Moderator: John Simson, Program Director Emeritus, Business & Entertainment, Kogod School of Business, American University

Panels will begin at 8:30 am and end by 5 pm, with lunch and refreshments. More details to follow. Contact the Artist Rights Institute for any questions.

Admission is free, but please reserve a spot with Eventbrite, seating is limited! (Eventbrite works best with Firefox)

Previously confirmed panelists are:

Keynote: Graham Davies, President and CEO of the Digital Media Association, Washington DC.  Graham will speak around lunchtime.

CHICKEN AND EGG SANDWICH:  Bad Song Metadata, Unmatched Funds, KYC and What You Can Do About It

Richard James Burgess, MBE, President & CEO, American Association of Independent Music, New York
Helienne Lindvall, President, European Composer & Songwriter Alliance, London, England
Abby North, President, North Music Group, Los Angeles
Anjula Singh, Chief Financial Officer and Chief Operating Officer, SoundExchange, Washington DC

Moderator:  Christian L. Castle, Esq, Director, Artist Rights Institute, Austin, Texas

SHOW ME THE CREATOR – Transparency Requirements for AI Technology:

Danielle Coffey, President & CEO, News Media Alliance, Arlington, Virginia
Dahvi Cohen, Legislative Assistant, U.S. Congressman Adam Schiff, Washington, DC
Ken Doroshow, Chief Legal Officer, Recording Industry Association of America, Washington DC 

Moderator: Linda Bloss-Baum, Director of the Kogod School of Business’s Business & Entertainment Program

THE TROUBLE WITH TICKETS:  The Economics and Challenges of Ticket Resellers and Legislative Solutions:

Kevin Erickson, Director, Future of Music Coalition, Washington DC
Dr. David C. Lowery, Co-founder of Cracker and Camper Van Beethoven, University of Georgia
  Terry College of Business, Athens, Georgia
Stephen Parker, Executive Director, National Independent Venue Association, Washington DC
Mala Sharma, President, Georgia Music Partners, Atlanta, Georgia

Moderator:  Christian L. Castle, Esq., Director, Artist Rights Institute, Austin, Texas

by Trichordist

Press Release: Opposition grows worldwide about TikTok’s decision to stop negotiations with @MerlinNetwork

[Editor Charlie sez: This post from Worldwide Independent Network is available here.]

TikTok’s decision to disintermediate Merlin and walk away from negotiations to renew its current license has sparked widespread concern across the global music industry. The platform is contacting independent music companies directly to try to reach individual deals. Many fear that with this move TikTok intends to pay less for music.

Merlin acts as the licensing partner for the independent sector, playing a crucial role in providing efficiencies for digital platforms, promoting diversity and consumer choice, as well as delivering market access and value for its members. With more than 500 members representing over 30.000 record labels, distributors, and rights holders around the world, Merlin currently accounts for 15% of the global recorded music market and has deals with over 40 digital services.

“TikTok’s decision to walk away from Merlin puts independent labels in an impossible place with their artists: it’s a choice between their music being available on the platform or ensuring fair license terms.” explains Zena White, WIN Chair. Noemí Planas, WIN CEO, adds that “Merlin was created by independent music companies to compete at the highest level and ensure they can access the best terms. TikTok’s decision poses risks to cultural diversity, market access, and fair payment for independents. But this is not just about TikTok. We urge policymakers around the world to regulate the tech sector to ensure a truly competitive market where creators’ rights are protected from abusive and monopolistic behavior.” TikTok continues to resist calls from the sector to address the existing ‘value gap’, which has a negative impact on the independents’ ability to defend their music and rights.

Asia

Owned by Chinese company ByteDance, TikTok is the world’s largest social media platform after Facebook, YouTube, and Instagram. Asia is home to 6 of the top 10 countries by number of users and local music companies fear TikTok’s decision threatens the level playing field. Jong-Gill Shin, Secretary General of the Record Label Industry Association of Korea (LIAK) says: “LIAK expresses profound concern over the current circumstances, which pose a significant risk of fostering discrimination against creative works. It is imperative that all music, regardless of whether it originates from major or independent sectors, be accorded equal value and recognition. We unequivocally oppose TikTok’s recent attempts that threaten to undermine our efforts to secure equitable terms. Aligned with our fellow WIN members globally, we stand resolute in our commitment to upholding and safeguarding the intrinsic value of independent music.” China’s neighbors have also raised concerns about TikTok’s compliance with data protection laws, with India banning the app over national security concerns.

North America

In the United States, the second-largest market by number of TikTok users with 120.5 million, concerns are raised about abuse of power from the platform. In April, President Biden signed a law that would ban TikTok unless ByteDance sells its stake within a year. Richard Burgess, CEO of the American Association of Independent Music (A2IM), comments: “TikTok’s unwillingness to negotiate a licensing deal with Merlin is just the latest example of the platform doing whatever it can to avoid compensating artists fairly. Now, more than ever, we need Congress to enact the Protect Working Musicians Act and give musicians, songwriters, independent labels, and publishers the ability to negotiate collectively in the marketplace.”

Similar concerns are raised in Canada, where the music community is actively engaged in the regulatory process around the Online Streaming Act, which extends broadcasters’ requirements to invest in Canada’s music sector to digital platforms and is being met with mounting resistance from the tech sector. “By bypassing local regulations and enforcing unfavourable terms on rights holders, platforms create a significant power imbalance,” says Gord Dimitrieff, Chair of Government Relations at the Canadian Independent Music Association (CIMA). “It stifles competition, reduces cultural diversity, and limits consumer choice.” Andrew Cash, President and CEO of CIMA adds that TikTok’s decision “should act as a wake-up call to Canadian policy makers and politicians engaged in regulating the tech sector.”

Latin America

TikTok was the fastest-growing social media platform in Latin America in 2023. “From a Brazilian perspective, TikTok’s decision not to renew the agreement with Merlin could weaken the representation of independent music, which plays a crucial role in promoting cultural and regional diversity,” says Felippe Llerena, President of the Associação Brasileira da Música Independente (ABMI). “Without a collective agreement, small labels may have more difficulty negotiating individually, negatively impacting their visibility and participation on a platform as relevant as TikTok.” The Brazilian organization claims that this move not only compromises the diversity of content available on the platform, but also does not make sense from a commercial and strategic point of view. Brazil ranks third in TikTok users by country, with 105.3 million, followed by Mexico, with 77.5 million users, but concerns are also raised in other markets of the region. “It is extremely detrimental for the independent sector in Latin America that TikTok is applying this pressure to bypass Merlin. The very purpose of Merlin is to ensure fairer and more equitable representation for all, especially in regions like ours, and we stand by it. The most affected will be the smaller players, who will have few options, and our biggest fear is that they will end up facing the worst conditions.”adds Francisca Sandoval, President of Asociación Gremial Industria Musical Independiente de Chile (IMICHILE).

Europe

Following value gap concerns raised in April, the Independent Music Companies Association (IMPALA) has opposed TikTok’s attempt to boycott Merlin. The European organization highlights the importance of collective deals for diversity and consumer choice, and notes that it is vital that independents and digital services work together and explore ways to grow the value of the moment economy as a key part of the music ecosystem, as proposed in IMPALA’s ten-step plan to make the most of streaming. “We believe giving labels the option to work under a collective deal is the best way for TikTok to achieve these aims and work with artists and genres from across Europe,” says Dario Draštata, IMPALA Chair and Chair of RUNDA Adria. “We respect freedom of choice in entrepreneurship. The growth of the independent sector across all platforms is fundamental to provide fans and consumers with choice and diversity, exactly what TikTok stands for. The easiest way to achieve that is through Merlin.” says Helen Smith, IMPALA’s Executive Chair. She adds: “We invite TikTok to see the value of a renewed collective deal through Merlin and collaborate on growing this important part of the ecosystem. We hope that efficiency and choice for TikTok users, as well as access for artists and labels whatever their country or genre or level of success, and of course joint and standardised efforts on fraud, will prevail.” France, Belgium, Germany, and other European countries have also come forward in support of Merlin.

Australasia

TikTok is crucial to the music industry, and music is crucial to TikTok. An experimentconducted by TikTok in Australia in 2023 to analyze how music is accessed and used on the platform showed that limiting the licensed music users can experience caused the number of users and the time they spend on the app to decline. “We are highly alarmed at the news of TikTok’s decision to walk away from the negotiating table with Merlin before any licensing renewal discussions could even begin. As if that wasn’t onerous enough, TikTok have stated their intention to seek direct deals, and provided a very, very short runway for labels to sign an NDA. This would be hilarious, if it wasn’t so disrespectful and further demonstrates that TikTok’s behaviour completely undermines their previously stated support of worldwide independent rights holders. IMNZ, as representative and advocate for New Zealand artists and labels, joins with our global compatriots in the hope that TikTok makes the right decision – and finds its way back to the licensing table with Merlin, and smartly”, says Dylan Pellett, General Manager at Independent Music New Zealand (IMNZ).

WIN is committed to ensuring that all businesses in the music sector are best equipped to maximize the value of their rights, regardless of their size and origin, and Merlin is a key partner in this. The global independent music community remains steadfast in its support for collective licensing negotiations and calls on TikTok to return to the table and work on solutions that benefit all parties involved.

by Trichordist

Keynote and Speaker Update for Nov. 20 @ArtistRights Symposium

We’re pleased to announce the speakers for the 4th annual Artist Rights Symposium on November 20, this year hosted in Washington, DC, by American University’s Kogod School of Business at American’s Constitution Hall, 4400 Massachusetts Avenue, NW, Washington, DC 20016.  The symposium is also supported by the Artist Rights Institute and was founded by Dr. David Lowery, Lecturer at the University of Georgia Terry College of Business. 

The four panels will begin at 8:30 am and end by 5 pm, with lunch and refreshments. More details to follow. Contact the Artist Rights Institute for any questions.

Admission is free, but please reserve a spot with Eventbrite, seating is limited! (Eventbrite works best with Firefox)

Keynote: Graham Davies, President and CEO of the Digital Media Association, Washington DC.  Graham will speak around lunchtime.

The confirmed symposium panel topics and speakers are:

THE TROUBLE WITH TICKETS:  The Economics and Challenges of Ticket Resellers and Legislative Solutions:

Kevin Erickson, Director, Future of Music Coalition, Washington DC
Dr. David C. Lowery, Co-founder of Cracker and Camper Van Beethoven, University of Georgia
  Terry College of Business, Athens, Georgia
Stephen Parker, Executive Director, National Independent Venue Association, Washington DC
Mala Sharma, President, Georgia Music Partners, Atlanta, Georgia

Moderator:  Christian L. Castle, Esq., Director, Artist Rights Institute, Austin, Texas

SHOW ME THE CREATOR – Transparency Requirements for AI Technology, moderated by Linda Bloss-Baum, Director of the Kogod School of Business’s Business & Entertainment Program

CHICKEN AND EGG SANDWICH:  Bad Song Metadata, Unmatched Funds, KYC and What You Can Do About It, moderated by Chris Castle

NAME, IMAGE AND LIKENESS RIGHTS IN THE AGE OF AI:  Current initiatives to protect creator rights and attribution, moderated by John Simson, Program Director Emeritus, Business & Entertainment, Kogod School of Business, American University

Additional confirmed speakers to be announced soon.

https://kogod.american.edu
by Trichordist

Artist Rights Institute: Estimated 2025 Inflation Adjustment for Physical and Vinyl Mechanicals

A backgrounder for artists and songwriters from the Artist Rights Institute

Summary: The fight over frozen mechanicals continues to pay off as songwriters log another cost of living increase for physical/downloads while streaming falls farther behind.

The Copyright Royalty Board adjusted the US statutory mechanical royalty for physical carriers like vinyl, CDs and downloads annually during the current rate period. This is entirely due to the success of public comments by the ad hoc songwriter bargaining group that persuaded the Copyright Royalty Judges to reject the terrible “frozen mechanicals” settlement negotiated with the NMPA, NSAI and RIAA. 

As it turned out, once the judges rejected the freeze as unfair, the labels quickly agreed to a fair result that increased the physical/download rate from a 9.1¢ base rate to the 12¢ rate suggested by the Judges which went a long way to making up for the 15 year freeze at 9.1¢. In fact, if it had just been presented to the labels to begin with, a tremendous amount of agita could have been saved all round.

Crucially, not only did the base rate increase to 12¢, the judges also approved a prospective cost of living adjustment determined by a formula using the Consumer Price Index. The end result is that unlike streaming mechanicals paid by the streaming services like Spotify (i.e., not the labels) the value of the increase from 9.1¢ to 12¢ has been protected from inflation during the rate period (2023-2027). 

Unfortunately, the streaming services were allowed to reject a cost of living for streaming mechanicals, notwithstanding the Judges’ and the services’ acceptance of an COLA-type adjustment to the multimillion dollar budget of the Mechanical Licensing Collective. That COLA is ased on a government measurement of inflation (the Employment Cost Index) comparable to the CPI-U that is used to increase the services’ financing of salaries and other costs at the Mechanical Licensing Collective. So those who are paid handsomely to collect and pay songwriters get a better deal than the songwriters they supposedly serve.

What is the increase in pennies this year for the physical/download mechanical rate? The Judges determine the inflation-adjusted rate every year during the five year rate period (2023-2027). The calculation is made in December for physical/download with reference to the CPI-U rate announced by the Bureau of Labor Statistics as of December 1, which means the rate published on November 11. The new rate goes into effect on January 1, 2025.

At this point, there does not seem to be any indication that there will be a large spike in inflation between now and November 11, so we can use the September rate (just announced in October) to make an educated guess as to what the 2025 statutory rate increase will be for physical/downloads (rounded down):

So we can safely project that the base rate will increase from 12.4¢ for 2024 to about 12.6¢ in 2025 without firing a shot. If you have a 10 x 3/4 rate controlled compositions clause, that means the U.S. controlled pool on physical will be approximately 94.5¢ instead of the old frozen rate of 68.25¢.

It’s important to note a couple things about the relevance of CPI-U as a metric for protecting royalty rates from the ravages of inflation. First of all, the CPI-U is a statistical smoothing of the specific rates for particular goods and services that it measures and doesn’t reflect the magnitude of changes of some components.

For example, the September CPI-U increased by 0.2% on a seasonally adjusted basis. However, the shelter index and the food index increased at higher rates:

The shelter index rose by 0.2%, and the food index increased by 0.4% Together, these two components contributed over 75% of the monthly increase in the all items index.

Moreover, the MLC itself receives an increase that is tied to the lesser of 3% or the Employment Cost Index (which was approximately 4.5% for the trailing 12 months ending June 30):

Chris Castle said, “These are good benchmarks to keep in mind as we head into a new rate setting period in a year or so when I expect songwriters to demand a COLA for streaming mechanicals. No more poormouthing from the services. If they can give it to MLC, they can give it to the songwriters, too.”

by Trichordist